Gov't considers support for auto parts companies to reduce GM fallout: official

By Lee Joon-seung
SEOUL, June 2 (Yonhap) -- The government is considering support measures for
local auto parts manufacturers that may be hurt by the fall of General Motors
(GM), a senior official said Tuesday.

Vice Knowledge Economy Minister Rim Che-min told reporters that while no
immediate action will be taken, Seoul is carefully reviewing all options and
setting up a contingency plan.
GM Daewoo Auto & Technology Co., the South Korean unit of the beleaguered U.S.
automaker, has more than 800 parts and components suppliers and produced around
882,000 vehicles last year with 86.8 percent being exported.
At present, regional governments, banks and large carmakers have provided payment
guarantee funds to help parts makers gain access to liquidity, but the Chapter 11
protection filing by the world's No. 2 carmaker on Monday may mean that more
assistance is needed.
GM asked for court bankruptcy protection in the face of plummeting sales and
rising debt, with the U.S. government stepping in to become the largest
shareholder with a 60 percent stake in the company. U.S. officials have
emphasized that there will be a streamlining of operations that could result in
34 percent of the workers being laid off and downsizing of overseas operations.
"There has been exchange of information from the U.S. Treasury Department on
developments, but Washington has not officially asked for support yet," the
official said. He pointed out that it may take up to three months before the
legal aspect of the Chapter 11 filing can be sorted out.
"Before there is a definitive move on how GM will be managed in the future and
what affiliates will be maintained and those that will be sold off, it is
impossible for South Korea to take any meaningful steps," Rim said.
He added that although bankruptcy protection effectively translates into a
freezing of payment by GM to affiliates like GM Daewoo, most of the money due to
the South Korean affiliate would not be affected.
"GM Daewoo is owed about 70 billion won, but a large part of this is payment that
can come from GM's European and Latin American operations that should not be
affected by the crisis unfolding at the parent company," Rim said.
The remark by the official repeats statements made in the past to stabilize the
auto industry in the face of stagnant domestic and overseas sales.
In 2008, South Korea produced 3.83 million vehicles, or 6 percent of the global
total, with 70 percent of these being shipped abroad. Exports reached US$48.9
billion with the country's trade surplus in this sector topping $41.3 billion in
the cited year. The auto industry as a whole hires roughly 1.6 million workers.
yonngong@yna.co.kr
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